Determining the Optimal Product Mix with One Constrained Resource and a Sales Constraint

Casual Essentials, Inc. manufactures two types of team shirts, the Homerun and the Goalpost, with unit contribution margins of $5 and $15, respectively. Regardless of type, each team shirts must be fed through a stitching machine to affix the appropriate team logo. The firm leases seven machines that each provides 1,000 hours of machine time per year. Each Homerun shirt requires 6 minutes of machine time, and each Goalpost shirt requires 30 minutes of machine time.

Assume that a maximum of 49,290 units of each team shirts can be sold. Required: Round answers to the nearest whole number.

1.What is the contribution margin per hour of machine time for each type of team shirts?

Contribution Margin

Homerun $

Goalpost $

2.What is the optimal mix of team shirts?

Optimal Mix in units

Homerun:

Goalpost:

3.What is the total contribution margin earned for the optimal mix?

$